Rio Tinto Group, the world’s third-biggest mining company,
last month ended talks to take part in the expansion planned to
boost shipping capacity to about 385 million metric tons by
2017, citing a weaker global economy and rising costs.
Queensland began talks last year with Rio and five other
companies about developing six new terminals at Abbot Point to
ship coal to customers in Asia.

“The costs are huge and the scale is too big,” John
Wiseman, a Queensland government spokesman, said by phone. “The
approach from the new Queensland government is going to be that
we will proceed with terminals two and three and scale up as
needed.”

Mining companies including BHP Billiton Ltd., the world’s
biggest, and Rio flagged this month they will ration capital
spending after optimism for a global economic recovery was
dented by China cutting its growth forecast in March. The cost
of adding production in Australia, the biggest exporter of iron
ore and coal, has risen as much as 100 percent, Tom Albanese,
Rio Tinto’s chief executive officer, said this month.

Vale Ends Talks

Anglo American Plc, Rio and Vale SA were among companies
last year given the right to negotiate for the building of
future terminals. China-backed Macmines AustAsia Pty, a group
comprising Peabody Energy Corp., New Hope Corp. and Carabella
Resources Ltd., as well as Waratah Coal Pty were also in talks.
Brazil’s Vale has also decided to withdraw from the process
after Rio, the Australian newspaper reported today, citing Jeff
Seeney, Queensland’s deputy premier.

“The others are considering their position,” Wiseman
said. Thermal coal prices have fallen 13 percent since the start
of the year, according to data from researcher McCloskey Group
Ltd.

Abbot Point, located 25 kilometers (16 miles) north of the
town of Bowen, has been nominated as the potential loading point
for companies planning about $32 billion of thermal coal
projects in Queensland’s Galilee Basin. The terminal also serves
as a loader for coal produced in the state’s Bowen Basin, the
world’s biggest source of steelmaking coal.

India’s Adani Enterprises Ltd. paid $1.8 billion for a 99-year lease of Terminal 1 last year and is studying an expansion
to 85 million tons from 50 million tons. BHP and Hancock Coal
Infrastructure Pty are in advanced talks to develop the second
and third terminals, according to North Queensland Bulk Ports’
website.

The previous Queensland government in December boosted
expansion plans from three to nine additional terminals to meet
demand from coal producers, two more than under an earlier A$6.2
billion plan.

The Labor Party-led government suffered a landslide defeat
in elections for the state parliament in March, ending its 14
years of rule in Queensland. The Liberal National Party, led by
Campbell Newman, won 79 of the 89 parliamentary seats.